GOLDMAN: 'Auto Economics 101' Explains Why Rising Interest Rates Won't Smash The Demand For Carshttp://www.businessinsider.com/goldman-auto-economics-101-2013-7/comments
en-usWed, 31 Dec 1969 19:00:00 -0500Fri, 09 Dec 2016 10:05:26 -0500Sam Rohttp://www.businessinsider.com/c/51e5ec706bb3f70b7c000005PJisSoCalTue, 16 Jul 2013 20:59:28 -0400http://www.businessinsider.com/c/51e5ec706bb3f70b7c000005
Goldman Sachs analyst Patrick Archambault seems like he failed Econ 101.
1. Maybe DPI shifts demand to the right. Maybe DPI shifts demand for subway rides and dinners out. It's non-sequitur to claim that DPI up means car sales up.
2. Higher rates means people pay more for credit, thus their buying power drops because creditors cut back the amount they are willing to lend given a short-term income, which is fixed for all practical purposes.
So, the question becomes, which is rising faster, the growth in the interest rate or the growth to incomes. If it is the former, D1 shifts to the left and not the right.
Now, as a personal exercise, ask yourselves what happens to car makers when they face higher prices for credit needed to buy inputs.http://www.businessinsider.com/c/51e5d389ecad043535000015i disagreeTue, 16 Jul 2013 19:13:13 -0400http://www.businessinsider.com/c/51e5d389ecad043535000015
I've bought three cars over the past 10yrs. The highest APR was 1.9% on a VW in 2003. My last two Hondas were 0% and 0.9%. Absent a like reduction in price (unlikely), I would be loath to pay much more in interest for a new car. Kinda expected now.http://www.businessinsider.com/c/51e5cdbc69bedd602e000004Mike MillerTue, 16 Jul 2013 18:48:28 -0400http://www.businessinsider.com/c/51e5cdbc69bedd602e000004
The economy isn't growing.On a different note Sam why didn't break the story about the national debt being the same for 56 days straight ?